National Credit Amendment Bill Under the Spotlight

National treasury recently briefed the portfolio committee on trade and industry on the constitutionality of the Draft National Credit Amendment Bill.

The draft committee bill is designed to provide debt interventions for low income, over-indebted consumers.

It was published for comment in November 2017.

Treasury recently sought a legal opinion on the constitutionality of the proposed legislation.

The opinion looked at the proposed provisions which create a debt intervention mechanism, and in particular the permanent extinguishing of a debt (sections 88A to 88E), and those which give the trade and industry minister the power to prescribe by regulation a debt intervention measure (section 88F).

Legal opinion concluded that the draft bill’s provisions allow for a deprivation of property. This was, however, not seen as expropriation of property.

Treasury proposed that the draft bill clearly lay down the right of credit providers to be heard before the tribunal.

With regard to whether the deprivation is substantively arbitrary, legal opinion concluded that a debt intervention measure is not inherently arbitrary or unconstitutional but the manner in which the provisions were currently drafted “open the way to the real risk of constitutional attack.”

It was suggested that the recommendations to address each of the key legal issues identified be implemented to minimise the risk of “constitutional attack.”

Counsel also recommended that proposed section 88F be amended so that it only allows for the minister to prescribe debt intervention measures for the purposes set out in the proposed sections 88F(2)(a) and (b).

Meanwhile, the parliamentary law advisor responsible for drawing up the draft bill, Adv Charmaine van der Merwe, provided responses to the legal opinion and the public submissions.

Adv van der Merwe declared that the committee had consulted widely on the proposed legislation.

She recommended that the committee ensures that the bill is rational, reasonable and proportionate – and then it can still apply retrospectively.